What is the safest way to pay a contractor?
Pay by cheque or credit card in milestone instalments tied to completed work — never pay the full amount upfront, and never pay in cash with no receipt.
Last reviewed: 10 June 2026
Explanation
Home improvement and contractor fraud is one of the most common ways people lose money to scams. A contractor takes a large deposit, does little or no work, and disappears. Or the work is completed but is shoddy and disputes arise about the quality. The payment method you choose significantly affects your ability to recover money or seek redress.
Cheques create a paper trail: the payee is named, the amount is recorded, and you have a cancelled cheque as proof of payment. Credit card payments are even better because the chargeback right allows you to dispute charges for services not rendered. Be aware that some contractors apply a convenience fee for card payments; for large projects it may be worth paying this fee for the protection it provides.
Avoid large upfront cash payments entirely. Cash has no paper trail, no dispute mechanism, and a contractor who accepts only cash may not be licensed and insured, which affects both your legal protections and the quality guarantee. A legitimate contractor will accept cheque or card.
Structure payments in milestones: a reasonable deposit (typically 10-30% for most projects, never more than 50%), a progress payment at a defined stage, and a final payment on completion and inspection. Retain the last payment until you have walked through the finished work and are satisfied. Get all payment terms written into a signed contract before work begins.
Common red flags
- Contractor demands full payment upfront before any work begins
- Cash only with no written contract or receipts offered
- Very low quote that requires immediate decision before 'the price goes up'
- Contractor shows up unsolicited after a storm and pushes for same-day commitment
- Cannot provide a license number, insurance certificate, or business address when asked
- Wants payment made out to a personal name rather than a business name
What to do now
- Pay by cheque or credit card and require a written receipt for every payment
- Structure the contract with milestone payments, not a single upfront sum
- Verify the contractor's license number with your state licensing board before hiring
- Check reviews on multiple independent platforms and ask for references from recent clients
- If work was abandoned after a large deposit, report to the state contractor licensing board
- Dispute credit card charges for work not completed before the 60-day window closes
Frequently asked questions
How much deposit is normal for a contractor?
Industry norms vary, but a deposit of 10-30% is typical for most residential projects. Be very cautious of any contractor asking for 50% or more upfront. Some states cap contractor deposits by law.
What if a contractor refuses to accept cheque or card?
A cash-only policy is a significant red flag. It may mean the contractor is unlicensed, uninsured, or not declaring income. You should at minimum demand a detailed written receipt for any cash paid and verify their credentials independently before proceeding.